Magazine article American Banker

Indiana Bill Would Multiply U.S. Development Tax Credit

Magazine article American Banker

Indiana Bill Would Multiply U.S. Development Tax Credit

Article excerpt

Indiana lawmakers are mulling a bill that would give state tax breaks to small banks for investing in local development.

The legislation is being pushed by the Community Bankers Association of Indiana. It is modeled after the Treasury Department's New Markets Tax Credit program, which provides federal tax credits to lenders investing in community development.

Under the Indiana bill, sponsored by state Rep. Bill Crawford, D-Indianapolis, Indiana banks and thrifts whose investments qualify for the federal credit would also get state credit. Louisiana is believed to be the only other state with a similar law.

S. Joe DeHaven, the trade group's president and chief executive, said its members see the credits as a way to bring economic development money into a state that desperately needs capital but lacks investors.

The association created the CBAI Community Development Inc. to make federal credits available to its members and wants to multiply their effect by adding the state tax benefit.

"Now we've just got to go out and help [Rep. Crawford] get a hearing and sell it," Mr. DeHaven said.

For the bill to pass in the current legislative session, which is scheduled to end April 29, the House Ways and Means Committee would have to report it out by Feb. 24. Mr. DeHaven said he is hopeful that it will pass this session.

"In the conversations we have had with various representatives, we have not encountered any opposition," he said.

The trade group spent much of 2003 working on an application for the New Markets program after Frank A. Hoffman, a tax lawyer with the Indianapolis firm of Kreig DeVault LLP, brought it to the bankers' attention.

After 9/11, Mr. Hoffman said, financing dried up for small businesses he was working with, but banks were still interested in affordable housing tax credits. …

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